If climbing out of debt were as easy as falling into debt, borrowers would probably not be searching for effective ways to become debt-free.

As it happens, seeing the light at the end of a tunnel when weighed down by bills and fees might feel like it’s impossible, but some smart choices involving the adoption of a few responsible habits and addressing financially detrimental behaviour will eventually lift the burden of debt.

The foundation of the tips below: save more, spend less. Apply this mantra to as many aspects of your life as possible then make it habitual. You will not only stay out of debt, but will also stabilize your financial status long term.

How to pay your debts strategically

There are a number of strategies that can be used to set up a payment plan. For starters, paying more than the minimum is ideal for a high credit card balance.

Using a financial calculator can also help to determine an monthly payment plan.

The next step is to order your debts from most to least expensive, excluding your mortgage.

The Credit Counselling Society has a strategy that actually involves only paying the minimal requirement for all bills and focusing on paying off the most expensive debts first.

The logic behind this is simple: your greatest debt is incurring the most amount of interest, thereby increasing your overall debt at a faster pace than smaller bills and fees.

Once your greatest burden is paid off, shift those funds towards the next largest bill. The cycle continues until all debt is eliminated.

Conversely, Stephanie Holmes, a Nova Scotia-based financial advisor, presents another payment strategy: she recommends paying making additional payments on the smallest of arrears. Since it is not an overbearing amount, it will be easily paid off and sums can then be allocated to the next smallest balance.

To slash or not slash the plastic

People fall into debt partly because of impulsive spending. Behaviours like this tend to perpetuate a person’s debtor status.

Though it may be hard to execute at first, altering spending habit is a proactive solution to paving the way to financial security.

Buying what you want when you want it will only complicate financial matters and sink you further into debt; this is why exercising self-control is key.

Some things heavily instigate reckless spending. A credit card, drawing customers addictively with its loyalty systems and rewards is one such instigator, so opt for cash whenever possible.

The Credit Counselling Society estimates that the average Canadian household can save more than $3,000 every year by using cash. But what about the cashback you would’ve gotten by using your card, you ask?

According to the society’s calculations, average savings amounted to only $400 at the best of times. So cash has way more zeros than plastic.

Love the convenience of the card and a lightweight coin-free wallet? Limiting the number of credit cards is a good way to eventually make the switch to cash.

One person needs no more than two credit cards. Having more results in unnecessary money spent on annual fees.

But using the card isn’t all bad, especially when it comes to tracking purchases. RBC’s myFinanceTracker, available for customers enrolled in online banking, is an excellent way to monitor spending habits.

Purchases are automatically categorized and displayed visually as a graph. Clients can even create customized budget goals, which is essential for debt management.

A costly piece of metal

The degree-house-and-car trio has been engraved so deeply in the minds of young Canadians these societal ideologies are now inciting debt-incurring behaviour.

However, the car is the worst of the three. The degree can be paid off with work, house values appreciate so profitability can be attained in the foreseeable future, but a car depreciates with time.

Yet vehicular expenses only seem to go up with time, with thousands of dollars spend on insurance, maintenance and repair every year.

One of the many luxuries of urban life is high accessibility to trains and bike lanes. Take advantage of these for a healthier you and a blooming planet. Holmes told Canadian Living, “Let go of the idea that owning is better.”

Larger cities often come with options for long-term car rentals. As a secondary option, becoming a one-car household is a good option for those with multiple vehicles sitting in the driveway and racking up charges.

In addition to these tips, there is a wealth of information available online, but a payment strategy, careful spending, while also avoiding credit cards and cars will ease debt faster to get your life back on track.

Author BIO

This guest article has been submitted by Risha Ellison, a freelance finance blogger specializing in the bad credit and debt industry.